Wednesday’s Trading – 2/25/09

It’s very curious that Obama is on a mission to cut the deficit. Weren’t the Keynesians just arguing that we need to dramatically increase deficit spending to stimulate the economy and pass a gigantic stimulus bill? You know the rationale: it doesn’t matter what the government spends money on as long as money is injected into the economy. They could buy cars from GM and drive them into the ocean, and the jobs created at GM would still be a net gain for the economy. And now Obama is going to cut the deficit?

I’ll bet that nothing is cut from the deficit. In the end, money will be shifted from Republican constituencies to Democratic constituencies. Politics will be done as usual, and nothing to truly help the economy will be done as usual.

173 thoughts on “Wednesday’s Trading – 2/25/09

  1. I think anything in the 60’s for SRS is a good position. Took profits at the open on it from Yesterday but back in with a partial buy at $67.8 a few minutes ago

  2. JG, agreed on the volume…might watch for it to fall back to the neckline and see if we bounce off of it.

  3. If i wanted to get whipsawed, i’d go to a domanatrix. I wonder she has an appointment time available today ??

    Nope, too many bankers ahead of me.

  4. George,

    DELL has fallen so much because it doesn’t do flawless EW counts. Prechter is using an Epson computer.

  5. That stress-test may be a stroke of genius. Depending upon the variables and requirements, all banks could be great. That would give them a confidence boost for the public and investors.

  6. Has anyone seen a detailed description how this stress test is being done? Which models are used? The banks’ internal models? ROFL – we already had that experience. The regulator’s model? Regulators don’t know what a model is. How are they going to value CDS? Afaik pricing models for these things are questionable. Or will everything be put into level3, model-to-myth applied and the test passed? Obscurity does not instill confidence, although it seems Wall Street considers loss of confidence bullish.

    Somehow the last rally from 740 was a bit more impressive.

  7. Is it strange that when I envision the stress test I imagine Geithner with a whip making CEO’s jump through hoops of fire? (Benny Hill music theme in the background). I agree George, its all going to come down to how they interpret a few things. Go one way and everything is fine, go the other and we’re all screwed.

    In the grand scheme, I think this is nothing more than a delay game to see if the stimulus plan can do something (ANYTHING). What do they really have to lose in 6 more months if it all ends in some sort of “nationalization”? Why do it today when you can do it tomorrow?

  8. Ah, I need to look at my other charts more often…that was about the 50% retrace of the most recent drop. There’s a nice double top on the SPY hourly…well, there WAS a nice double top.

  9. dave, I went to USC (the South Carolina one). Our math wasn’t quantum physics, it was “want dem cheezits?”.

  10. We didn’t have any grass on the football field because the cheerleaders (girlz and boyz) grazed it down to the dirt.

  11. George,

    Right, you were worried that you WOULD get it. JFK said that DC was a town of northern charm & southern efficiency.

  12. CNBC is reporting that Geithner, earlier in the day, put out a term sheet for the mandatory convertible proffered shares the government will buying. Maybe the stress test is just to determine which banks will be forced to issue those shares.

  13. Loss of almost exactly 2% on SPX in the final 30 minutes of trading…don’t want to wait to hear about the stress test, I guess.

  14. Buzz,

    don’t know if you’re a football fan. In Dec 06, this line was written about a Colts/ Jaguars game “The only reason the Jaguars didn’t go for 400 yards Sunday was the end zone kept getting in the way.”

  15. matt…. ..we may not have to figure out which wave is which……we may have the date of the low…….feb9 high at full moon…….turnaround tuesday yesterday feb 24 was the new moon…… is the full moon on march 10…………..the question is……………. got moon??????

  16. JG,

    i don’t remember that at all. Would think that zig zags are often found before short 5’s & failed fifths.

    Couldn’t face another prolonged triangle or narrow multi-week trading range.

  17. JG,

    dont’ feel we’re out of the woods yet, either, because trendline from yesterday wasn’t broken on the late dive.

  18. dave, exactly. I thought about shorts just before the EOD selloff, but couldn’t make myself do it.

    I just checked Prechter, p. 44: “Within impulses, second waves frequently sport zigzags, while fourth waves rarely do.” That fits with 2s wiping out most (or all in the case of leveraged ETFs) of one’s profits (something I have unfortunately experienced–thus it got encoded into memory).

  19. JG,

    Thank you. It just doesn’t sound right for weak 5’s though.

    Btw, please see my 3:13PM. I just cannot see these as 2 or ii’s … all.

  20. Is today George’s birthday?
    Or was JG’s SGA oscillating?
    I shorted more SPY @ 77.92, which looked like a top tick for all of 7 minutes 🙂 Cashed in @ 76.62 AH

  21. Here’s a comment on the stress level in the test.

    RE will decrease more imo. Here is some data from Mr Shiller: Overshoot and collapse never ends at the long-term average.

    I wouldn’t call this a “stress” test… CRE anyone? And I’d really like to know how they calculate the stress in the derivatives, especially the level 3 stuff. Ridiculous.

  22. JG,

    Before i put aside my belief that we’re still in (3) which long-term is much more bearish than labeling it (5). I’m labeling early January as the beginning of 5 of (3) for SPX & DJI. One can clearly see a sideways, choppy multi-week corrective period for DJI & SPX from approx 1/20 to 2/9, which i’m labeling as ii of 5 of (3).

    Using 2/9 as the beginning of SPX iii of 5 of (3) one can see a very well defined second wave on 2/12 & 2/13 followed by six down days in a row before yesterday. Therefore, i cannot see us in a two wave of any degree, but instead a fourth wave yesterday & today.

    Btw, labeling us in (3) instead of (5) fits with P/E’s still being too high and gives the mkt more opportunity to reach an long cycle “undervalued” multiple befitting the economy.


  23. Exactly Yerk, this is all going to come down to the assumptions that are made. Those assumptions could turn this into something worthwhile or just another farce.

  24. Why can’t the stimulus money spent in a way that makes it possible to reach someone in Maine 3 days after snow has fallen… Power lines belong below the soil not below trees.

  25. George,

    When watching some program about megastructures, i think they said a bldg like the Sears Towers sways about a foot at the top. And that’s where we’re going to lease our offices, George !! We may have to Shanghai K & Yerk & others.

  26. dave. as long as there is a rooftop observatory so I can see how the stars are lined up i’ll be fine staying on the swaying roof.

  27. i certainly don’t like looking down so i refuse to take the job unless you provide skydiving gear. I’ll skydive from the office every afternoon

  28. dave,

    @5:58… that’s where I have us, too. Still on (3). I understand the evidence for (5), but some things are out of place for me to call it that. Like you, I’m at 4 of 3 of 5 of (3).

    I don’t get the 2s, either. I wondered about it awhile back, but the time course is wrong, the scale is wrong, and 4s are a better fit for any number of reasons.

    For me, doing waves on INDU and anything else thinly represented can be misleading.

    A formula I wrote, stuck on one of my charts 8 trading days ago, and then forgot about got hit at today’s top, exactly. Man, I should review ALL of my charts. Even less sleep…. oh no!

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